American Airlines 2008 Annual Report Download - page 31

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28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Information
The discussions under Business, Risk Factors, Properties and Legal Proceedings, and the following discussions
under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and
“Quantitative and Qualitative Disclosures about Market Risk” contain various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When
used in this document and in documents incorporated herein by reference, the words "expects," "plans,"
"anticipates," “indicates,” “believes,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “seeks,” “targets” and
similar expressions are intended to identify forward-looking statements. Forward-looking statements include,
without limitation, the Company’s expectations concerning operations and financial conditions, including changes
in capacity, revenues, and costs, future financing plans and needs, overall economic and industry conditions,
plans and objectives for future operations, regulatory approvals and actions, including the Company’s application
for antitrust immunity with other oneworld alliance members, and the impact on the Company of its results of
operations in recent years and the sufficiency of its financial resources to absorb that impact. Other forward-
looking statements include statements which do not relate solely to historical facts, such as, without limitation,
statements which discuss the possible future effects of current known trends or uncertainties, or which indicate
that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-
looking statements in this report are based upon information available to the Company on the date of this report.
The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a
result of new information, future events, or otherwise. Guidance given in this report regarding capacity, fuel
consumption, fuel prices, fuel hedging, and unit costs, and statements regarding expectations of regulatory
approval of the Company’s application for antitrust immunity with other oneworld members are forward-looking
statements. The Risk Factors listed in Item 1A, in addition to other possible factors not listed, could cause the
Company's actual results to differ materially from historical results and from those expressed in forward-looking
statements.
Overview
After earning a modest profit in 2006 and 2007, in 2008 the Company was severely challenged by the difficulties of
very high fuel prices (oil prices reached a record price of $147 per barrel in July 2008) and a rapidly deteriorating
economy in the second half of the year. In reaction to these challenges, throughout 2008 the Company
implemented several key actions designed to help it manage through these near-term challenges while continuing
to position the Company for long-term success.
In response to soaring jet fuel prices, in May 2008 the Company announced capacity cuts to take effect during the
last four months of 2008 as it attempted to create a more sustainable supply-demand balance in the market. At
the same time, in an effort to generate more revenue, the Company introduced a range of new service charges,
such as a service charge for a first checked bag, that were expected to generate incremental annual revenue of
several hundred million dollars.
The Company also continued to focus on strengthening its balance sheet and executing on its fleet renewal and
replacement plan, as further described below, and implemented a number of initiatives to improve its dependability
and on-time performance. In addition, the Company continues to look for ways to strengthen its global network,
and in August 2008 the Company, along with four fellow members of the oneworld global alliance, filed an
application with the U.S. Department of Transportation for global antitrust immunity.